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Jon Corzine and MF Global: “The System Failed Us”

Posted by Larry Doyle on May 23, 2012 6:08 AM |

Almost eight months and still the customers of MF Global both here in America and overseas wait for restitution of their funds . . . and the American public waits for justice.

But this story is passe and it is time to turn the page, correct? On to the 2012 campaign. The war on women. The debate over private equity. Who’s married to whom? Folks, those topics may be worthy of debate, BUT they are sideshows as the theft and destruction of our trust, integrity, and confidence continues.

Many situations and individuals have been party to the theft and destruction. In my opinion, though, no one situation and no one individual more than MF Global and Jon Corzine.

Let’s beat this drum again, and absorb the following from a Frontline documentary which aired last evening. I thank the regular reader who brought this to my attention:

“The system has failed us.”…”I mean, what’s the point. We may as well not have the regulator.”…”Nobody was going to look out for us.”

Financial regulatory reform?

Are you kidding me?

MF Global customers awake once again this morning wondering if and when they will get their money. Every day that goes by without those funds being repatriated to these customers is another day in which our political leaders and financial regulators fail all of us.

You will NOT need a second cup of coffee today after taking in this 20-minute clip which goes inside MF Global and lays out in spades THE classic case of Wall Street-Washington incest.

Watch Six Billion Dollar Bet on PBS. See more from FRONTLINE.

Watch Six Billion Dollar Bet on PBS. See more from FRONTLINE.

Feel like taking a shower?

Thoughts, questions, comments, constructive criticisms encouraged and appreciated.

Navigate accordingly.

Related Commentary: Sense on Cents/MF Global-Jon Corzine

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Rob

    There’s a lot of ‘systems’ failing us these days.

  • fred

    LD,

    If you play this out, we are all at risk. Regardless of where you put your money. Your money can be taken from you without your knowledge and without your consent.

    Come to think of it, as the debt to gdp ratio continues to rise, isn’t the gov’t itself the worst of all special interests stealing money from the public?

    As John Bradford once said, “there but for the grace of God go I”.

    Every U.S. citizen should demand justice for every customer who still has not been fully reimbursed. Every executive who should have known, should be prosecuted and exposed to public ridicule and scrutiny.

    When is enough, enough? When it’s too late?

  • Ray

    Hi Larry,

    Top Senate Republican Prepares Subpoena for CFTC Chairman Over MF Global

    CFTC-Gensler Breaks Silence on MF Global

  • Obsvr-1

    yeah, good thing I watched before the morning shower …

    I agree with Chris Whalen … they should have also had Bill Black on the show.

  • Ron Larson

    I learned something from this program about the MF Global failure that I did not know before. I was not aware that they were able to book profits before they were realized. That explains a lot. Yet I have never read any discussion about fixed the accounting rules that allow that to happen.

    That one point seems to be the engine that drove the bets, and the fraud. It sounds exactly like the same games Enron was playing with their books. Yet rules about repos and segregated funds doesn’t address this fault.

    I guess an analogy would be: You buy lotto tickets, and you are able to claim you won and spend the winnings before the drawing happens.

    As long as a company can book fake profits like this, then we can’t trust the numbers. Very simple. Who else is playing this game? All of them?

    • LD

      Ron,

      Oh, it is not about the actual figures; it is merely a function of when you can book them to make it look like you are making money. This game was a huge piece of the sub-prime puzzle. It is part and parcel of what is known as “accrual accounting“:

      The revenue recognition principle is a cornerstone of accrual accounting together with matching principle. They both determine the accounting period, in which revenues and expenses are recognized. According to the principle, revenues are recognized when they are realised or realisable, and are earned (usually when goods are transferred or services rendered), no matter when cash is received. In cash accounting – in contrast – revenues are recognized when cash is received no matter when goods or services are sold.

  • A shower isn’t going to be enough.

  • Russ

    Larry,
    And this different than Madoff how?

    • LD

      Corzine is more deeply and openly in bed with Washington. This is not to shortchange the disdain I have for those involved in allowing Madoff to operate BUT Corzine literally had a foot firmly and clearly entrenched in both camps.

  • Bruce

    This article clearly explains why MF clients WILL NOT get their money back. This due to a legal hole in re-hypothecation laws.

    http://newsandinsight.thomsonreuters.com/Securities/Insight/2011/12_-_December/MF_Global_and_the_great_Wall_St_re-hypothecation_scandal/

    We are all at risk WHEN the massive bets banks and institutions have made all collapse ‘simultaneously’ in a complete global economic collapse. The Fed will try and fail to stop it – it is simply far far too big. And it is right around the corner, lurking.






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